Following recent property acquisitions, I elected to increase my life cover by £250,000 for the next 10 years and applied to Scottish Equitable, who appeared to offer the cheapest premium according to comparisons sourced from The Exchange.
My application was submitted online. However, a few days later I was contacted by Scottish Equitable, who told me that they would not be prepared to pay indemnity commission because I am an IFA but instead would reduce the premium accordingly.
Let me state for the record that whether or not the commission is paid on the indemnity basis, on the drip or by premium reduction is immaterial to me. What I do object to is not only the lack of choice but also the reasons behind this decision.
I was told that the decision was taken last year at a “very high executive level” because of the “financial risks” allied to such business. It seems clear to me, therefore, that this decision could only have been taken for one of two reasons. Either Scottish Equitable's finances are in such a parlous state that they cannot risk the possibility of a few IFAs defaulting on the payments and being unable to repay the indemnity commission or, alternatively, they distrust the IFA community at large so comprehensively that they feel that indemnity commission for IFAs would somehow be the subject of widespread abuse.
I fail to see the rationale behind the decision in either case but, for my part, I am not prepared to promote an insurance company that is either too poor to absorb the possibility of a handful of unpaid lapses or who distrusts our community so completely.
I would also urge other IFAs to excommunicate Scottish Equitable immediately as they are clearly not the type of company with whom we should be doing business.
Graham Steed Essex Financial Services, Brentwood, Essex